Production Cut Deal Extension
One of the significant reasons why the U.S. oil benchmark soared revolved around expectations that OPEC and other major producers will agree to expand their output-cut deal beyond March. True to predictions, the coalition prolonged the current dynamic for another nine months to the end of 2018.
The agreement, now renewed twice, keeps 1.8 million barrels a day (or 2% of global supply) off the market in an attempt to clear a supply glut. While there are several question marks over the degree to which the cartel members are adhering to their quotas, there’s no ignoring the fact that the cuts continue to narrow the market imbalances.